0.10 / 0.08 = 1.25
since there is no growth rate (and 100% of earnings are paid out each year) that would be the price for both years
Well
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ABC paid a dividend of 0.10p in 2011 (100%) payout ratio. Market price of share is 0.80p.
suppose that investors expect the earning per share and the dividend payout policy will prevail forever and require an 8% annual return, what price will they pay at beginning of 2012 and 2013.
Can anyone help?
